Congratulations to the winner of Saturday’s Powerball drawing: DraftKings. The gambling company, which owns the lottery courier app Jackpocket, says ticket sales on its app have surged in anticipation of the $1.8 billion jackpot. An initial burst of optimism over a soft US jobs report making a Federal Reserve rate cut this month a foregone conclusion didn’t last long on Friday. The S&P 500 gave up early gains to close down 0.3%. The Nasdaq 100 eked out a 0.1% advance and the Russell 2000 outperformed with a 0.5% rise, though both indexes finished well off their highs of the day. 🧠 Trivia time: Test your knowledge with our weekly Snacks Seven Quiz. Here’s the first question: |
|
|
Back in April 2012, Paul Krugman eulogized the death of the "confidence fairy,” detailing how arguments that proponents of fiscal austerity used to justify their stances — that lower government would be more than offset by positive side effects from more optimistic consumers and businesses — had fallen flat. Well. Guess who’s back. |
- The most recent nowcast from the Atlanta Fed suggests consumer spending will add nearly 1.5 percentage points to economic growth (quarter-on-quarter, annualized) in Q3, which would be its strongest contribution this year.
- Bank of America aggregated credit and debit card data showed US spending up 2.8% year-on-year for the week ending August 30. From mid-May through the end of June, this was running close to flat.
- US consumption is top-heavy. The top 40% of earners drive more than 60% of spending, and a recent Federal Reserve paper showed that the resilience of the US consumer since 2021 is thanks to those earning over $100,000.
|
As of the first quarter of this year, stock investments accounted for 22.4% of net worth, just off the all-time high it hit the quarter prior. If we run with the following set of facts and assumptions: |
- US consumption is disproportionally driven by higher earners;
- Higher earners are more likely to own stocks than lower earners;
- Retail traders aggressively bought the dip in the US stock market;
- Tariffs hurt the purchasing power of lower-income Americans more than higher-income earners;
- The stock market is pretty much near all-time highs…
|
The conclusion that emerges is pretty clear. |
|
|
We can intuitively suspect that this wealth effect might be a pretty potent countervailing force to tariffs, which the Budget Lab at Yale estimated to be a $2,300 hit in after-tax terms to the average American household. It took confidence to buy the dip. That confidence was rewarded, as walk-backs on some trade levies and robust corporate earnings (in large part thanks to the AI boom) helped return the S&P 500 to all-time highs by June. That retail traders — also known as US consumers — were intense buyers of the downside in US equities relative to hedge funds means they disproportionately benefited from this recovery. |
|
|
Keep This Stock Ticker on Your Watchlist |
Pacaso is a private company. |
|
|
Stories we’re obsessed with |
- Pepsi’s challenge: With Elliot Investment Management taking a $4 billion activist position in PepsiCo, the company’s performance is in the crosshairs. And so far, things are not going great, with its North American sales going flat and its flagship soda slipping down to a new low in the rankings. That’s culminated with Pepsi now having the widest valuation gap to rival Coke in 25 years, as is made plain in this chart.
- What’s in a nAIme? When your ticker is “AI,” people expect you to be riding the wave better than anyone else — that hasn’t happened for C3.ai. Shares popped after its IPO, but are now down ~90% from its peak, seriously missing the AI rally that’s defined the last two years. We charted which AI stocks are flourishing in AI the boom and which ones are floundering.
|
|
|
Options trading, for everyone. |
Just as they bring choice, versatility, and flexibility to everyday life, options can help investors manage risk, generate income, and potentially optimize investment performance. Learn from Cboe® about how life is better with options.5 |
|
|
(Photo illustration: Sherwood News; Photo: Alex Wong/Getty Images) |
|
|
- Monday: Earnings expected from Casey's General Stores
- Tuesday: Earnings expected from Oracle, GameStop, and Synopsys
- Wednesday: August Producer Price Index. Earnings expected from Chewy
- Thursday: August Consumer Price Index. Earnings expected from Adobe and Kroger
- Friday: September preliminary University of Michigan consumer sentiment
|
|
|
Advertiser's disclosures:
1 Pacaso recently received their ticker reservation with Nasdaq ($PCSO). Reserving the ticker symbol is not a guarantee that the company will go public. Listing on the Nasdaq is subject to approvals. 2 Pacaso estimates the U.S. market at $1.3 trillion and the European market as $500 billion. See website for further details. 3 Past performance is not indicative of future performance. For more details on the gross profit for 2021-2023, please see management discussion of the financial condition section of the offering circular (p.41). For more details on the 2024 gross profit, please see the 1-K Financial Statements section (p.12). 4 The minimum investment is $1,035.52 when including the 3.5% investor fee. This is a paid advertisement for Pacaso’s Regulation A offering. Please read the offering circular and related risks at invest.pacaso.com. 5 Investing in private company securities is not suitable for all investors because it is highly speculative and involves a high degree of risk. It should only be considered a long-term investment. You must be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid, and there is no guarantee that a market will develop for such securities. There are important risks associated with transacting in any of the Cboe Company products discussed here. Before engaging in any transactions in those products, it is important for market participants to carefully review the disclosures and disclaimers contained at: https://www.cboe.com/us_disclaimers/. |
|
|
Was this email forwarded to you? Don’t miss out on future stories — subscribe to Snacks and get your daily dose of financial news straight to your inbox. Craving more insights in your inbox? Subscribe to Chartr and The Wrap for quality reads. |
|
|
Sherwood Media, LLC produces fresh and unique perspectives on topical financial news and is a fully owned subsidiary of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate... See more |
|
|
SHERWOOD MEDIA, LLC, 85 Willow Road, Menlo Park, CA 94025 | |
|
|
